German budget deficits will hit €90 billion by 2010, breaking Germany's post-war budget deficit record of €40 billion in 1996, the German Finance Minister said Thursday.
“The budget deficit will soar well over 4% of gross domestic product (GDP) in 2010 which will breach European Union rules,” said Peer Steinbrueck, German Finance Minister.
“This budget deficit would double to €90 billion by next year, this year's federal budget alone would exceed €50 billion, up from a deficit of €11.9 billion last year, he said in an interview with Financial Times.
Based on official tax revenue forecasts released on Thursday, that figures make it clear that Germany will breach the European Union's fiscal rules by a wide margin this year and next.
German economy is expected to shrink by 6% this year which is the sharpest contraction since the Great Depression of the 1930s.
Under the EU's Stability and Growth Pact, the Euro area members are bound to maintain public deficits below 3.0 percent of GDP and public debt at less than 60 percent of GDP.
Steinbrueck said this sharp increase in deficit spending stems mainly from the stimulus package announced on Tuesday by Chancellor Angela Merkel, which is at €50 billion ($66 billion). It is the largest since 1945.
He also said that Germany would nevertheless keep within the boundaries of the pact in 2009.